• Provider deficit after Q1 broadly in line with plans
  • NHS observers welcome the report, but warn that situation is likely to worsen throughout year
  • Further actions needed to reduce year end forecast deficit of £644m

The overall NHS provider sector has reported a deficit of £461m for the first three months of the financial year, which was £5m better than planned.

According to a performance report released by NHS Improvement on Thursday afternoon, this includes about £450m of sustainability funding. Without this, the year to date position would be a deficit of £911m.

This compares to a deficit of around £930m at the same point last year, when there was no sustainability fund.

The regulator has only released one section of the report, with full details including trust-by-trust performance expected to be published tomorrow.

Of the 214 providers, out of 238, that have signed up to financial targets, known as “control totals”, 185 have met their financial targets in full, which has enabled them to access the sustainability funding, NHSI said.

The performance data has been cautiously welcomed by NHS observers, though some experts have predicted that the situation will worsen significantly throughout the remainder of the year.

The report does not provide a year-end forecast, but says without “further action” by some trusts, the aggregate deficit would be £64m worse than planned. After factoring in the entire £1.8bn sustainability fund, this would leave a year-end deficit of £644m, against the planned £580. Last month regulators said this needs to be reduced to £250m, although there is no mention of this requirement in the latest report.

The report does not break down the performance for each sector.

Last week, HSJ analysis suggested that more than three quarters of acute trusts have predicted they will meet their financial target, but the acute sector overall was forecasting a shortfall of around £75m at year-end.

The NHSI report says: “It is acknowledged that Q1 financial performance is an early indicator of financial performance for 2016-17 and that the provider plan profile has a challenging trajectory for the remainder of this year, but it should also be recognised that many providers are making demonstrable financial progress and this is a promising start for the sector.

“Indeed it is noticeable that the sectors achievement of meeting its aggregate financial plan for the quarter bucks the trend of recent periods of being significantly off plan at Q1 recent periods.”

However, Sally Gainsbury, senior policy analyst at the Nuffield Trust, repeated warnings published by HSJ last week. She said: “On the face of it these figures show NHS providers more or less on track. But there is a real risk that they give a rose tinted view of a more troubling underlying picture – because access to the special £1.8bn fund which trusts desperately need to keep paying staff wages is tied to them reporting the ‘right’ figures at the end of each quarter…

“So although today’s results reflect a lot of hard work from managers and professionals, we should be ready for the possibility of a nasty surprise towards the end of the year.”

NHS Providers welcomed the report and said the figures have resulted from “hard work locally and a clear national plan”. But it warned that a new survey of trust finance directors, conducted by the membership body, suggested that almost four in 10 are “not confident of meeting the financial targets” by the end of 2016-17.

A survey by the King’s Fund had similar findings. Richard Murray, the think tank’s director of policy, said it would be “a mistake to suggest that the financial pressures which have engulfed the NHS have eased”.

The NHSI report says “urgent remedial action” is needed to address a £45m shortfall against cost improvement plans in the first quarter of the year, and that providers are on target to reduce spending on agency staff by £1bn compared to 2015-16, following the introduction of wage caps for agency staff.

Updated: NHS provider sector on track to meet financial plans, says regulator